On This Page:

Aruba’s property market improving

April 16, 2014

After several years of falling house prices, Aruba's property market is now recovering, thanks to robust economic growth and continued growth in tourism.

There are no official data such as average house prices per square metre (sq. m.) and rental prices in Aruba, so it is difficult to analyze the market. However, a two-bedroom house with a pool was priced at about US$325,000 in 2013.

After a decade-long increase in house prices, Aruba's property market started to slow sharply in 2009, amidst the global economic and financial crisis. House prices fell by about 15% to 25% starting 2009, according to real estate experts. The economy contracted by 11.3% in 2009, with another 3.3% contraction in 2010.

The property market is now recovering, amidst healthy economic growth in 2013.

Bakval, located south of Malmok, has the most expensive housing in Aruba. Prices of residential properties in Bakval ranged from US$800,000 to US$1.3 million. North Americans, especially those from the United States, are the largest group of homebuyers in Aruba. However, recently, there has been growing interest from South Americans, primarily from Brazil and Venezuela.

Residential construction is also picking up. In 2013, the number of construction permits granted for houses and apartments rose by 18.8%, to 582 permits.

Mortgages are obtainable, though most homebuyers prefer to pay in cash. In 2013, the total amount of outstanding housing mortgages amounted to US$894 million (AWG1.58 billion), up 3% from a year earlier, according to the Central Bank Van Aruba. In the fourth quarter of 2013, the average interest rate for housing mortgages was 6.6%, slightly down from 6.7% in the same period last year.

There was healthy tourism growth in Aruba in 2013. International visitors to Aruba rose by 8.3% to 979,256 in 2013 from a year earlier, according to the Aruba Tourism Authority. More than 61% of all visitors came from the United States.

Aruba's economy expanded by 3.9% in 2013, after a contraction of 1.3% in 2012, a growth of 3.5% in 2011, and contractions of 3.3% in 2010 and 11.3% in 2009, according to the Central Bank Van Aruba.

The average price per square metre of houses in Aruba has dropped from US$1,676 last year to US$1,582 this year. Currently, the cost of a 150 square metre house located in the upscale neighborhoods of Aruba such as Bakval, is about US$226,000, whereas last year, it was about US$290,000.

Rental yields remain moderate to good, although slightly lower at 6.19% now, compared to an average of 6.67% last year.

Three-bedroom houses showed the highest rental return at 7.32%. Houses with more than four bedrooms earn a moderate 5.06% rental return.

Rental income taxes can be very high

Inheritance: Inheritance of spouse and children are subject to inheritance tax from 2% to 6%. Nonresidents inheriting Aruban property are liable to pay special property transfer tax levied at 8% on the property value.

Residents:Residents are taxed on their worldwide income at progressive rates. Residents are entitled to various deductions and allowances.

Buying costs are low in Aruba

Round-trip transaction costs are around 9% to 12% of the property's value, with the biggest cost being the agent’s commission, at around 5% the property value. Other costs are the transfer tax (3% - 6%) and notary fee (1%), usually paid by the buyer.

Rental law is pro-tenant in Aruba

Rent: Rent and rent increases can be freely agreed (in practice), though in law, the Rent Assessment Advisory Committee (the Committee) is responsible for determining the rent, approving rent increase, tenant evictions, and contract termination.

Tenant Security: Tenants can become ‘embedded’ in properties. The landlord needs permission from the Committee to end indefinite period tenancy contracts leases. Definite period tenancy contracts cannot be terminated even after the termination date, if the tenant wishes to extend.

Tourism pushes Aruban economy

Aruba is famous for its pleasant and very dry climate. Its flattish landscape of aloe and cactus is unique in the Caribbean.

The south and west coasts have miles of pristine white beaches and many picturesque hidden bays. Aruba is outside the hurricane belt, and cooled by constant trade winds.

Aruba’s economy is primarily based on tourism, oil refining, and offshore financial services. Stay-over visits saw a downturn 2001-2003 due to 9-11 terrorist attack. The island’s economy contracted 3% in 2001 and by another 3.3% in 2002. Then there was a revival in 2004, with total number of stay-over visitors increasing around 13.4% from 2003 to 2004.

2004, with total number of stay-over visitors increasing around 13.4% from 2003 to 2004

The island suffered adverse publicity the previous decade from the Nathalee Holloway case, which involved the disappearance of an attractive Alabamian 19-year old on May 30, 2005, during a high school graduation celebration trip. Several suspects were arrested, questioned, and later released, but no-one has been charged. Natalie’s disappearance and the arrests received an extraordinary amount of popular coverage on Fox News, CBS, and other TV networks, generating strong US sentiment against the island. This impacted Aruba’s tourist trade, and residential property.

Tourism bounced back strongly in late 2000s. In 2013, the total number of international visitors in Aruba rose by 8.3% to 979,256 people, according to the Aruba Tourism Authority. More than 61% of all visitors came from the United States.

Aruba’s economy expanded by a healthy 3.9% in 2013, after a contraction of 1.3% in 2012, a growth of 3.5% in 2011, and contractions of 3.3% in 2010 and 11.3% in 2009, according to the Central Bank Van Aruba.